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House Price Crash Forum


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Everything posted by aa3

  1. On the bright side looks like we might be hitting our carbon reduction targets early. Just think of all the energy those plants were using.
  2. I agree with you completely. I saw a fascinating table looking at government spending as a percentage of GDP going back over 100 years. And 100 year ago our great, great grandfathers were living in a country where the government spent ~5% of GDP. And this is while running a global empire! European countries ranged from about 3-7% of GDP on government. Now its 50-60% of GDP across western Europe, an incredible concentration of power. I'm not an anarchist, I believe the government can do quite a lot in this day and age, more than 100 years ago, but heading over 60% of the economy on government looks to me like a bubble. Somehow our ancestors got by for hundreds of years without planning comissions telling them where they could put new windows on their house, or running ad campaigns to convince them not to smoke.
  3. Imo China is respondeding the best of anyone to this. Massive fiscal stimulus, with a collosal amount of projects going for rapid start up. Hopefully soaking up the migrant worker population losing jobs at the factories. If Britain was spending hundreds of billions on exciting new infrastructure projects like nuclear power plants instead of the black hole bailing out bankers.. And some of those projects were starting to break ground already, with construction guys losing their jobs in residential and commercial real estate moving onto these projects... I'd be a lot more bullish about the UK's chances.
  4. +1 For the last generation so much of the population has put 100% of its faith in government and democracy to solve all the issues of life. Putting down the tools and demanding a better deal is taking matters into their own hands. The power we have in a free society is far beyond a vote every 5 years. Government has its place in society, but when they aren't protecting something that is very important like great jobs in oil, then workers need to stand up and stand together.
  5. I've got my money in Canadian dollars, Aussie dollars, Euros and a little in Japan. I want to get into the Chinese Yuan somehow. That seems to me to be the power currency of the future. I am too afraid to have much money in pounds. I just don't know how things are going to play out in the UK. An argument could even be made that in a blow up the authorities wouldn't hyperinflate, and there might be a hyper-deflation.
  6. Good point if home prices were very affordable people could spend a lot more on other things. Lots of young people are spending like 60% of their after tax income on rent or mortgage. Cut that in half to 30%, and their disposable income would rise by 75%. (From 40% of after tax income to 70% of after tax income).
  7. If I bump into a cleaning guy or gal at work I treat and talk to them as an equal that I believe they are.. like joking around or shooting the breeze. To me a cleaning person should be able to have a decent income and decent life. Aka their own modest home, their own car, benefits..
  8. The universal basic income is also the main pillar of what I would do if in charge. To me it deals with two of the main issues; how to provide benefits for thsoe in need without diminishing the reward for work. Which imo all welfare states have failed at.. to the point it actually is turning negative in Britain. Secondly how to deal with an economy which is going to be more and more automated, and simply requires far less workers. The second point is more of a long run issue that we'll have to deal with eventually. But we're already seeing signs of it; if everyone make £5.50 an hour there is no one to buy new cars, and even the rich owners of the capital are wiped out.
  9. It was very enlightening the thread I read on here about how peopel were actually coming ahead on welfare than working in decent jobs. If you compare to like Subway jobs, the welfare people are coming out way ahead. I even compare higher income earners I know, and they are coming out ahead of simply not working.. but not by much. I think you also described what has to change, some combination of the cost of living or the standard of living. I'm going to go out on a limb and guess it is the cost of living is going to plummet. I've been in the deflationista camp for a long time.. basically if wages are falling and costs of production are falling even harder at some point it has to transfer into prices, as much as Cartel Britain tries to stop it. And as much as the government tries to prop up things like rents by paying any price for the welfare recipients. Even so the market has ways around that, such as massive new build coming online. And simply the amount of tax money received declines as wages and work decline and that limits the ability of the central government to keep funding cartel prices. It would mean it would have to divert money from elsewhere, and then we'd see falls in that 'elsewhere'.
  10. A part could be explained by rising bureaucracy. Say I'm a geologist with the backing of some investors looking in an area. I just found a bunch of HPC's favorite thing, gold, great lets bring in the diggers and order in the conveyers and crushers right(and all the high paying jobs that go with those)? Not so fast, we're looking at many years of permits, studies, approvals and such IF it gets approved. So the money just sits there.
  11. Some are starting to see that printing money isn't inherently bad. Its only bad if it is excessive to cause hyperinflation. I'm personally a believer of debt-free money. The government would spend into circulation enough money to keep prices roughly the same(it would spend more than it collects in taxes and borrowing through bonds). Which would need adding to the money supply as production rises with technology and as the population grows. Plus I believe a small consistent inflation of around 2% is healthy. So in my system all money is printed money. I think the world has hit a wall with fractional reserve banking. It nearly hit the wall in 2001 but by recklessly lowering interest rates and credit standards the authorities were able to keep the systemgoing for a few more years. In a world of huge productivity gains from technology and globalization a promise to pay in say 30 years gets more and more abstracted. Frankly in 30 years most people of average IQ won't be contributing anything to the economy, so their promise to pay is worthless. In fractional reserve banking debt is money and debt is a promise to pay. Already now in 2009 the value of an average IQ person in the first world is cratering. Why not move production to automation or if not automation to the developing world. And the answer is there is no reason not to economically. So what jobs do they work? Retail sector jobs and government non-jobs. But even retail, how long will it be before Tescos and friends, go to self-serv checkouts, and eventually robotic system to restock shelves.(which are already entering warehouses around the world, but are too primitive for a retail enviornment yet).
  12. Good point, Mike. I think Gordon is right on this. Look at Russia they tried defending their currency, burned through $150 billion USD.. and then it fell anyway. To me defending a currency is just giving traders a super easy entry position that they can also take as big of a position at that point as they want. Instead the Russians could have sent $1,000 USD to every Russian man, woman and child to stimulate the economy.
  13. Shared ownership of anything seems like a bad idea. I'm even wondering if I'lle ver buy stocks again after selling in mid-2007. When I really think about it, it seems suicidal to trust my money to other people and have no say. Maybe a long time ago when there was integrity and such(if there ever really was).
  14. My prediction for economic collapse is mid 2010. At some point countries are no longer capable of making economic decisions for themselves. Eg.. Argentina. No matter how many times it fails the Argentinians always go for more socialism; they just can't give it up. So when things inevitably blow up in Argentina the creditors only will provide more credit if the government meets the conditions they set.
  15. I am one of the strongest supporters of free markets and private property rights you'll ever meet... AND I believe in a high minimum wage. The higher the better imo, I find the current one way too low. And it doesn't interfere with the free market as all businesses are on a level playing field. Raising the minimum wage up would not increase the price of goods proportionally very much. A doubling of the low end wages I calculated once would mean a 10% increase in prices at Tesco's. Yet doubling their wages would strongly increase those workers' ability to spend in the economy themselves. If I was in charge I'd put the minimum wage to £12.50 an hour. And really force companies to put people on full time who wanted to work full time. The government would also have to make sure enough work was out there for full employment. So no idiotic green policies like shutting down a nuclear power plant, or shutting down a steel mill which employ many people and brings money into the economy.
  16. That to me is the essence of the problem. Why we're seeing this feed on itself now that people can't get more and more credit.. which was making up for the wages not keeping up with productivity(even remotely). Its also why although I'm not a big fan of some things unions have done, there is a time and a place, and now is a time when they are needed to collectively bargain. I think the anglo-saxon countries could use much stronger retail unions for example. If Tescos and Sainsbury's and co were unionized and paying decent middle class income with job protection and benefits, news of their recruiting wouldn't be a bad thing. Then the people working there could also afford to buy other things like new cars and it becomes a virtous circle if done right. If done wrong there is enforced shortages, and then the higher wages just goes to inflation as people bid against each other.
  17. I like her language calling these people idiots.
  18. Thats why I have been saying the US *might* make it through this thing. Although its going to be devastation in funds like pension funds who bought these securitized mortgages and other debt. And what I've been saying is when the Euro property market craters like the USA property market has, it is going to devastate the Euro banks. For comparison Barclays liabilities are about the same size as the GDP of the UK. Whereas Citigroup's liabilities are about 16% the GDP of the USA. Actually the big 4 US banks; Bank of America, JPM, Citigroup and Wells Fargo together are probably less liabilities relative to the size of the US GDP than just Barclays is to the UK GDP. See my thread for UK bank liabilities: http://www.housepricecrash.co.uk/forum/ind...p;#entry1602610 The national debt of the UK, before taking on bank liabilities: £637,400m The liabilities the UK state stood behind earlier: Northern Rock liabilities: £107,000m Bradford & Bingley liabilities: £50,000m The liabilities of the mega banks the government is either effectively standing behind or thought it soon will: Lloyds: £341,200m HBOS: £661,300m Barclays: £1,343,360m RBS: £1,887,108m Total liabilities for standing behind these 6 banks: £4,390,000m New liabilities of UK state: £5,027,000m (789% rise)
  19. It probably went down too hard too fast. Remember if it were to lose a huge 36% in a year verses the dollar and euro, that would be 3% a month. Or about .15% a trading day.
  20. Like VeryMeanReversion I have Schiff's book and read Mish everyday. I decided not to follow Schiff's advice for investing and kept my money in Euros, Canadian dollars, Aussie dollars, and a small amount of Japanese stocks. I've always been in the deflationista camp.. But I find Schiff enjoyable to read and listen to as he thinks the same way I do about real production as opposed to this fake speculative economy. Also like Schiff I am bullish long term on the vast rising Asiatic nations and the commodities producers Aussie and Canadians. Common sense tells me long run you want to be invested where the mass growth is, India and China. But short term a massive economic downturn you just wana get out of dodge. Its like with HSBC, I love the company and want to invest in it in time, but with banks getting their head taken off I knew they'd drag HSBC down too.
  21. I also think what is happening in California now will happen to the UK in time, its my template for the time events will happen. We were just about a year or a year and a half behind. If you look at the two areas the scale of the boom seems similiar to me. Also the two areas seem similiar in economics generally. Information economy and services I mean, with huge MEW spending and bubble money flowing itno the economy. And heavy regulations that deter industry. Its why I have been predicting the UK is unlikely to survive as we know it. I don't think the UK could handle the 50% wipe out in real estate prices that California has seen. The most beat down areas in California are down 66% from peak. Like you mentioned the bust starts to feed on itself as well. Just as a bubble feeds on itself and grows far larger and goes on far longer than bears think it can. California unemployment increased by 1% in just the last month. And that will mean more spending cuts by consumers, more defaults on mortgages, less tax revenues if it keeps going on. As spending is cut other businesses have to downsize if they want to stay in business. Or refuse and go bust when they run out of cash(some businesses are taking the second choice).
  22. House prices have to adjust to the new income levels. If the new 'jobs' are ones at Tescos for £5.50 an hour, working 20 hours a week.. that is an annual salary of £5,500. So at 3x income they could afford a £16,500 home. The market doesn't give a f--- how much someone has invested in a home, what its 'instrinsic value', or sentimental value is, how much new kitchens have been done or at what cost, or how far in debt the current owner is. The only thing the market cares about is how much a new buyer can pay.
  23. My own estimate, I made in early 2008 was financial company losses of over 10 trillion USD in the USA. And more like 20 trillion USD for the EU. An example of one type we haven't seen yet, the pension losses on private pensions through the insurers. The insurance companies assume an 8% a year growth in their investment portfolio. Then use annuity tables to calculate backwards to what the monthly premium is for the size of the plan being offered. (plus factoring in their very hefty overhead costs) So ING the very large Dutch insurer has ~1.43 trillion US dollars worth of assets and ~1.4 trillion of liabilities. But if assets fall in value by 50% then a hole of 670 billion USD opens up. The next year their assets are needed to grow by 1.43 trillion *.08.. so 114 billion to keep up. If assets stay down, that adds 114 billion to the hole.. and that is one institution in one year. This is somewhat an exaggeration as not all their liabilities and assets are for this purpose, its just to show how quickly these numbers can get out of control. Another where we've hardly seen much losses so far is corporate borrowing. Which in the USA is as large as the entire mortgage market. Companies are just starting to drop like flies.. and we've seen in places like America and the UK companies can easily and eagerly shed liabilities. Smiles all around as they file bankruptcy and keep going. But it has to be massive losses for whoever has lent them the money. It is a 12 trillion USD market in the USA, so if in the next year 10% of corporations go down and default that is losses of 1.2 trillion minus however much the banks can recover, which appears not much selling into this market.
  24. You have a good point. It would be a lasting legacy as the buildings would stay. Maybe they could announce a locked in rate they would pay for monthly rent for council recipients. And let developers and investors figure out what they can build that would make the specifications and regulations and be able to make a profit. One problem is that there is so much bureaucracy it could take many years before the first project got started and the amount that actually got through could be quite small. Thus not much stimulus for construction and manufacturing companies. Its one reason why I'm bullish on China, their massive stimulus is going to be hitting the economy hard and fast as they move so fast from proposals to construction. In fairness for Britian stimulus could be just in the form of cash, but it seems to be a nice way to have actual construction happen out of it when there is shortages.
  25. I've argued that all help state and private, to any place where people are starving should be tied to serious programs to reduce the birthrate. Its pointless to provide food for a people having 6 children per woman. Every generation it means their population triples. So the suffering becomes greater, not less. A lot of women in Africa who have like 3 children they already can't feed would love to have their tubes tied(especially the modern one that requires a relatively non-invase procedure, involving no surgery) For me its not even about race either as if a white population was massively overcrowding an area and starving asking for help... I'd respond the same way. Food and medicine plus a vast effort to reduce their birthrate well below replacement.
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